The Future is Now

1
Managing System Reliability in the New York
Competitive Energy Markets
A presentation to the System Operator for the
Unified Energy System of Russia Moscow,
Russia September 2007
Paul Kiernan Reliability Senior Engineer New
York Independent System Operator
2
The NYISOs Primary Purposes

• Reliable Operation of the New York Bulk Power
  System
• Administration of the Wholesale Electricity
  Markets

3
Capacity
Transmission Congestion Contracts
NYISO Markets and Auctions
Energy
Virtual Trading
Ancillary Services
4
Pre-Restructuring
Vertically Integrated Utilities

• Eight Utility Companies
• __________________________________________________
  ___
• Long Island Lighting
• Consolidated Edison
• Orange and Rockland
• Central Hudson
• Niagara Mohawk
• New York State Electric
• Rochester Gas and Electric
• New York Power Authority
• __________________________________________________
  ___
• New York Power Pool
• Coordinated Operations

5
Pre-Restructuring

• Power System Operation
• Each utility operated independently
• Scheduled generator and transmission maintenance
• Committed and dispatched generation to meet load
• Determined interchange schedules
• Controlled voltage with mVar resources
• Controlled flows with phase angle regulators
• Determined switching operations
• Solved local transmission security problems
• Distributed energy to the customers in its
  franchise territory

6
Pre-Restructuring

• Economic Operation
• Each utility was
• Regulated by federal and state agencies
• Purchased and sold energy
• Direct Two Party
• New York Power Pool Central Dispatch
• Prices determined by production costs
• Scheduled transactions on its transmission system
  for its sole benefit

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Pre-Restructuring

• Coordinated Operations
• New York Power Pool
• (Voluntary alliance of the eight utilities)
• Reserves
• Transaction schedules
• Central Energy Dispatch
• Interconnection planning/operating studies
• Principle Directive Maintain Reliability

8
Post-Restructuring

• Disaggregate Functions
• Eliminate Market Power of the Vertical Utilities
• Increase Number of Market Participants
• Increased Competition Will Drive Down Prices
• Open the Transmission Systems
• Ensure access to all for competitive use

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Comparison

• Pre-restructuring
• Eight Vertically Integrated Utility Companies
• New York Power Pool
• Coordination
• Central Dispatch

• Post-restructuring
• More than 120 Market Participants
• Disaggregated Market Functions
• Generating Companies
• Transmission Companies
• Power Marketers
• Load Serving Entities
• NYISO
• Operate Power System
• Administer Markets

10
Post-Restructuring Challenge

• Markets
• Multiple Market Participants
• Profit Motive
• Flexible Market Design
• Maximum Use of the Transmission System

• Reliability
• Need to Maintain the Reliability of the System
• Highly Constrained System

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Independent System Operator

• Maintain system reliability
• Assume control of the New York transmission
  system
• Comprehensive planning to real-time security
• Facilitate fair and open access to the
  transmission system
• Determine commitment of generation resources
• Determine transaction schedules
• Impartially administer wholesale electricity
  markets
• Bid-based system bids are confidential
• Clearing prices are published

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Standard Market Design

• Two Settlement System
• Day Ahead Commitment
• Real Time Commitment
• Real Time Dispatch

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Two Settlement System

• Day Ahead Market
• Opportunity to lock in prices for next day
• Loads supply bids to purchase energy
• For all, part or none of next day load
• Generators supply offers to sell energy
• Bilateral transactions accepted
• Various pricing hedges available
• Clearing prices are made public

14
First Settlement Day Ahead Schedule

• Scheduled Load Generation become forward sales
  and purchase contracts. with financial
  obligations to provide or consume actual energy.

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Day Ahead SCUC
5 AM - Day Ahead Market Bids Due
Day 1
Hour Ahead RTC
75 Minutes before Hour Bidding Closes
30 Minutes before Hour Results Posted
Market Timing
Real Time Dispatch RTD
RTD Basepoints Every 5 Minutes
AGC Basepoints Every 6 Seconds
HB5
0 15 30
45 0
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Security Constrained Unit Commitment
5 AM - Day Ahead Market Bids Due
Day 1
Real Time Commitment
75 Minutes before Hour Bidding Closes
30 Minutes before Hour Results Posted
Market Timing
Real Time Dispatch
RTD Basepoints Every 5 Minutes
AGC Basepoints Every 6 Seconds
HB5
0 15 30
45 0
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Day Ahead
Load Forecasts Load Bids Energy
Offers Transaction Bids Virtual Load
Supply System Constraints Outages
Security Constrained Unit Commitment
Clearing prices Forward Contracts
Preliminary Schedule
Real Time Commitment
Hour Ahead
Energy Offers Transaction Bids
Advisory prices
Preliminary Dispatch Transaction Schedule
Market Inputs
Real Time Dispatch
Real Time Load
Real Time Dispatch
Real Time prices
Real Time Dispatch
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Security Constrained Unit Commitment
Day Ahead

• Commitment tool
• 1. Selects most economic mix of generation and
  transaction resources as bid
• to meet forecasted load and reserve requirements
• based on offers provided
• 2. Schedules are constrained by security
  evaluations
• recognizes all transmission limits
• recognizes all interface limits
• 3. Establishes day-ahead forward contracts for
  generation, load, and transactions

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St. Lawrence
Niagara
Gilboa
CSC
Neptune
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Chateauguay
Stability Constraints
Saunders
Willis
Moses- St. Lawrence
Massena
Dennison
Plattsburgh
Sandbar
Moses South
Colton
Blissville
Whitehall
Adirondack
Central - East
Bennington
Hoosick
Oswego
Dysinger East
Complex
Somerset
West - Central
Marcy
Rotterdam
Beck
Niagara
Sta.80
Pannell
New
Robinson Rd.
Scotland
Edic
Porter
Clay
Alps
Huntley
Gilboa
Lafayette
Stolle Rd.
Richfield Springs
Inghams
Leeds
Gardenville
Meyer
Andover
Palmiter
Total - East
Dunkirk
Fraser
Watercure
Oakdale
Hillside
Coopers
Pleasant
Corners
Valley
Roseton
Upny - Con Ed
Rock
Buchanan
Tavern
Millwood
Legend
Dunwoodie South
Homer City
Ramapo
765 kV
Sprainbrook
500 kV
W49St/Rainey
345 kV
Shore Rd.
230 kV
E.Garden City
115 kV
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Real Time Commitment
Hour Ahead Real Time Commitment

• Same software model and structure as Security
  Constrained Unit Commitment
• Runs every 15 minutes, optimizing ten periods
  totaling 2 ½ hours
• Observes updated load forecast
• Evaluates resource requirements
• Generator outages, transaction cuts, changes to
  topology
• Recognizes Hourly Bid Transactions
• Commits 10 and 30 Minute start resources
• Recognizes unit startup times and costs
• Produces advisory prices

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Real Time Dispatch
Real Time Dispatch

• Same software model and structure as Security
  Constrained Unit Commitment and Real Time
  Commitment
• Dispatches generators with basepoints to meet the
  5 minute projected load forecast
• Adjusts generation to solve security constraints
• Maintains reserve requirements
• Develops regulation dispatch basepoints every 6
  seconds to correct Area Control Error
• Calculates real-time clearing prices

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Second Settlement
Real Time Market

• More Options
• Loads can schedule bilateral transactions
• Buy at real time prices
• Generators can schedule bilateral transactions
• If accepted in the day ahead market
• Can lower bid prices
• If not accepted in the day ahead market
• Can increase, decrease or maintain bid price

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Second Settlement
Real Time Balancing Market

• Paid consistent with their forward contracts
• Generators that operate as scheduled
• Loads that consume as scheduled
• Purchase and/or sell supplemental energy,
• as needed, at real-time clearing prices
• Generators that operate differently than
  scheduled
• Loads that consume differently than scheduled

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Real Time Actual Load lt Day Ahead Load
Second Settlement
First Settlement
Day Ahead
Load Buys 40 MW _at_ Day Ahead Clearing Price
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Real Time Actual Dispatch lt Day Ahead Dispatch
Second Settlement
First Settlement
Day Ahead
Generator Sells 40 MW _at_ Day Ahead Clearing Price
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Real Time Actual Load lt Day Ahead Load
Second Settlement
First Settlement
Day Ahead
Load Buys 40 MW _at_ Day Ahead Clearing Price
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Real Time Actual Dispatch lt Day Ahead Dispatch
Second Settlement
First Settlement
Day Ahead
Generator Sells 40 MW _at_ Day Ahead Prices
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The New York Independent System Operator (NYISO)
is a federally regulated, 501(c) 3 nonprofit
corporation that began operations in 1999 to
facilitate the restructuring of New Yorks
electric industry. The NYISO operates the states
bulk electricity grid and administers the states
wholesale electricity markets. __________________
________________________________________ For
more information www.nyiso.com